Minoan Group Plc
Report and Financial Statements
Year ended 31 October 2016
Company registration no: 3770602
Minoan Group Plc
Report and Financial Statements
Year ended 31 October 2016
Contents
Directors and Advisers
Chairman’s Statement
Strategic Report
Directors’ Report
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Balance Sheet
Company Balance Sheet
Consolidated Cash Flow Statement
Note to the Consolidated Cash Flow Statement
Company Cash Flow Statement
Note to the Company Cash Flow Statement
Notes to the Financial Statements
1
2-4
5-6
7-8
9-10
11
12
13
14
15
16
17
18
19
20-47
Minoan Group Plc
Directors and Advisers
Directors
C W Egleton FCA (Chairman)
D C Wilson (Managing Director)
B D Bartman BSc (Econ), FCA
G D Cook MA, ACA
T R C Hill B.Arch
Company secretary
W C Cole FCA
Registered office
30 Crown Place
London
EC2A 4ES
Bankers
HSBC Bank plc, London
Barclays Bank Plc, Glasgow
Legal advisers
Pinsent Masons LLP, London
Nominated adviser and broker
WH Ireland Limited, London
Head office
3rd Floor
Sterling House
20 Renfield Street
Glasgow
G2 5AP
Administration office
3rd Floor
AMP House
Dingwall Road
Croydon
Surrey
CR0 2LX
Registrars
Neville Registrars Limited, Halesowen, West Midlands
Independent auditor
Moore Stephens LLP
Chartered Accountants and Statutory Auditor
150 Aldersgate Street
London
EC1A 4AB
1
Minoan Group Plc
Chairman’s Statement
Introduction
The status of the Itanos Gaia project in Crete (the “Project”) and of the Appeals against the issue of
the Presidential Decree (“PD”) and the positive outlook for the future will be the focus of my
Statement.
The dismissal of the Appeals against the PD would be transformational for the Group and the status
of our Travel and Leisure business (“T&L”) is equally encouraging albeit on a less significant scale.
Once again T&L reports strong year on year growth of 11% in total transaction value. This was
achieved despite the Brexit referendum which caused an immediate and significant short term drop
in business, exacerbated by a 50% drop in Turkish travel following terrorist activity.
Greece
In the Group’s Interim Results Announcement in July last year, I reported that Appeals against the
issue of the PD had been lodged and that we awaited a Court Hearing at which we anticipated a
decision to dismiss the appeals and confirm the granting of the equivalent of outline planning
permission for the Project.
On 24 March 2017 we announced on AIM that we noted Greek media reports stating that the
Appeals had indeed been rejected by the Greek Supreme Court (the “Court”). The timing of this
Chairman’s Statement is such that an official announcement has not yet been made by the Court and,
therefore, it is difficult to expand more on the Greek media reports other than, once again, to note
them.
Your Board has remained confident in the Greek justice system throughout the long process of
seeking the appropriate planning consent for the Project and, of course, the turn of events noted
above gives every reason for this confidence to be sustained. The Greek Supreme Court, like most
others, does not work to a published timetable and whilst it is possible that a decision is published in
a few weeks, shareholders should not be concerned if it takes longer.
The confirmation of the Appeals being dismissed will, of itself, be a transformational event on many
levels for the Group. It will necessitate considerable effort in a relatively short timeframe in order to
pursue more vigorously various ongoing discussions and negotiations with potential partners and
others in readiness for, and to continue after, the official notification from the Court.
It should be noted however, that joint ventures and other complex real estate transactions are not, by
their nature, quick or easy to bring to a conclusion. In our case, the fact that the Project is in a
country where there is economic uncertainty will also have an impact. Nevertheless, your Board is
confident in its ability to achieve a satisfactory solution for all shareholders.
I will report in due course when notification is received from the Court.
2
Minoan Group Plc
Chairman’s Statement (continued)
Travel and Leisure
T&L has again reported a solid set of financial results that reflect a continued growth in revenue and
gross profit despite the Brexit impact. This growth has funded a continued investment in operating
costs in order to take the business into the next phase of organic growth.
Total transaction value has increased in the period under review by 11% from £61m to £68m and
gross profit shows a year on year increase of £551,000 (8%) to £7,044,000 (2015: £6,493,000). The
investment in operating costs referred to above has increased the overhead cost to £6,772,000 (2015:
£6,106,000). EBITDA increased to £715,000 (2015: £698,000) whilst the effect of an increase in
depreciation charge sees operating profit decrease to £272,000 (2015: £387,000).
Having made the investment to secure continued growth the bounce back from the Brexit dip has
continued and I regard it as encouraging that gross profit in the current year is running at a year on
year growth rate of 16% and I expect a significantly better result in the current year.
Financial Review
The growth in revenue and gross profit is attributable to T&L as set out above.
In respect of Operating Expenses, a year on year increase in costs associated with the Project and in
Corporate Development, together with the investment in the T&L cost base noted above, has resulted
in an increase of £247,000 in the current year’s operating loss to £788,000 (2015: £541,000). The
cost increase and consequent decrease in operating profit is in line with the Group’s plan and is, in
the main, a function of investing for growth in T&L.
An increase in finance costs of £462,000 (which includes an increase in the warrants charge of
£282,000) sees the reported net loss move to £2,272,000 (2015: £1,620,000).
In respect of the balance sheet, and as noted above subject to receipt of formal notifications from the
Greek Supreme Court, we will be working hard on crystallisation of the value of the Project (which I
have previously reported to shareholders has been valued at “around €100m”). The value of the
Project in the Consolidated Balance Sheet is £43m. We reported to shareholders in October 2016 the
extension of the Loan Facility with Hillside International Holdings Limited to 30 June 2017.
Settlement of this loan will form part of our considerations in securing shareholder value for the
Project.
Outlook
In respect of the Project, we await confirmation and the publication of the decision from the Greek
Supreme Court. Once confirmation is received, the Group will be in a good position to negotiate
maximum value from partners and developers and, jointly, plan the next steps.
3
Minoan Group Plc
Chairman’s Statement (continued)
Outlook (continued)
In respect of T&L, I have noted above that the levels of organic growth remain healthy. However, in
order to achieve major stepped growth in this division through acquisition, the Board will continue to
work with advisors in considering the possibility of a separation of T&L from the rest of the Group
as well as other solutions.
Conclusion
It is difficult to fully express my own and the Board’s gratitude for the patience of our shareholders,
and the whole team’s efforts in bringing the Project to this stage. The delays suffered in Greece have
also adversely affected the growth of T&L where, for the past few years we have not been able to
acquire a number of businesses, for fear of creating unnecessary dilution in the value per share
expected from the Project.
On the presumption that the dismissal of the Appeals is confirmed in the not too distant future I
believe that 2017 will bring much better news for shareholders.
The next year is destined to be the most value enhancing in the Group’s history and I look forward to
making further announcements in the future.
Christopher W Egleton
Chairman
31 March 2017
4
Minoan Group Plc
Strategic Report
The directors present their Strategic Report and the audited consolidated financial statements for the year
ended 31 October 2016.
Review of business
A review of the Group’s business is given in the Chairman’s Statement on page 2.
The key performance indicators used in the travel businesses are total transaction value and gross profit. Total
transaction value has increased to £67,820,000 from £60,964,000 and gross profit has increased to £7,044,000
from £6,493,000. This reflects volume growth and the Group’s strategy of changing its business mix to
concentrate on more profitable products.
The directors are of the opinion that analysis using key performance indicators for the Project is not necessary
for an understanding of the development, performance or position of that operation.
Principal risks and uncertainties
The Group’s key risks currently remain centred round the Project. The Group has an ongoing requirement to
raise capital to finance its working capital. As has been the case for the past several years, the Group is in
continual discussions with a variety of individuals and commercial parties regarding the provision of funding
to enable the Group’s current and future obligations and requirements to be met. These discussions are at
varying stages of development and the Board is confident that all necessary funding will be forthcoming within
a timescale which will enable the Group to move forward to provide a return to shareholders in due course (see
also note 1).
As the Project now moves towards its implementation stage, the normal risks associated with a development of
its size and nature will apply. These include, inter alia, detailed planning consents, availability of project
finance, construction costs and market demand.
The risks relating to the travel businesses are primarily its reliance on supply from tour operators and airlines,
and changes in general economic and other business conditions which may adversely affect demand for
tourism products. There are no material risks related to currency.
Going concern
The Board is confident that the value of the Group’s asset in Crete, combined with its capital raising ability and
the future prospects for development in other areas of activity, justifies the conclusion that it is appropriate to
prepare the financial statements on the going concern basis (as described in more detail in note 1).
The directors envisage that any joint venture or partnership arrangements will preserve the nature of the
Group’s long term commitment to the Project.
5
Minoan Group Plc
Strategic Report (continued)
Corporate social responsibility
The Group has demonstrated its social responsibilities through its iterative approach to the evolution of the
Project, which has involved a transparent process and extensive consultation with stakeholders. The Project
design embraces the principles of the five capitals of sustainable development (i.e. natural, human, social,
manufactured and financial) to ensure that all related matters have been taken into account. Thus the more
usual concerns related to the protection of the environment, flora, fauna, hydrogeology and the ecology
generally have drawn in considerations of wider issues including social, cultural, human and economic matters
as well as those related to the extensive use of renewable energy and many other items contributing to a
healthy carbon footprint. The Project is strictly focused on the long term restoration and preservation of the
environment as a whole and puts in place a sustainable management plan, involving local representatives and
experts, to ensure a robust, pro-active management system is implemented aimed at protecting the area for
future generations.
In conducting its travel business the Group ensures that it is compliant with all appropriate regulations,
including those applicable to the protection of clients’ funds. In addition, the Group ensures, as far as possible,
that only reputable providers of holiday products are dealt with.
Approved by the Board of Directors and signed by order of the Board.
C W Egleton
Director
31 March 2017
6
Minoan Group Plc
Directors’ Report
The directors present their annual report for the year ended 31 October 2016.
Principal activities
The Company is a public limited company incorporated in England and Wales and quoted on AIM. The
Company’s principal activity in the year under review was that of a holding and management company of a
Group involved in the design, creation, development and management of environmentally friendly luxury
hotels and resorts and in the operation of independent travel businesses, through which the Group acts as agent
in providing a broad range of services including, inter alia, transportation, hotel and other accommodation and
leisure services.
Results and dividends
The financial statements are prepared in accordance with EU adopted International Financial Reporting
Standards (“IFRS”) and the Companies Act 2006.
The Group made a loss for the year, after taxation, of £2,272,000 (31 October 2015: £1,620,000). The loss also
includes a credit in respect of share-based payments of £24,000 (2015: charge of £57,000) and non-cash
finance cost in respect of warrants issued in association with the Hillside loan in the amount of £930,000 (31
October 2015: £628,000) (see note 17). These charges do not involve any cash payment.
No dividend is proposed for the year (31 October 2015: Nil).
The Group’s financial instruments and risk management are discussed in note 15.
Statement of directors’ responsibilities
The directors are responsible for preparing and reporting the financial statements in accordance with applicable
laws and regulations. Company law requires the directors to prepare financial statements for each financial
year. Under that law the directors have prepared the Group and Parent Company financial statements in
accordance with IFRS as adopted by the EU. The financial statements are required by law to give a true and
fair view of the state of affairs of the Company and the Group as at the end of the financial period and of the
profit or loss of the Group for that period.
In preparing the financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state the financial statements comply with IFRS as adopted by the EU; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Group will continue in business.
The directors confirm that they have complied with the above requirements in preparing the financial
statements.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and Group and enable them to ensure that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
7
Minoan Group Plc
Directors’ Report (continued)
Statement of directors’ responsibilities (continued)
The directors are responsible for the maintenance and integrity of the Group website, www.minoangroup.com.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Each director as at the date of this report has confirmed that, to the best of his knowledge, the Group financial
statements, which have been prepared in accordance with IFRS as adopted by the EU,
give a true and fair view of the assets, liabilities, financial position and loss of the Group; and
include in the Chairman’s Statement, the Strategic Report and Directors’ Report a fair review of the
development, performance and position or the Group, together with a description of the principal
risks and uncertainties it faces.
Under company law the directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the
Group for that year.
The directors in office throughout the period and at the end thereof, as referred to on page 1, remain in office as
at the date of signing of the Directors’ Report.
Insurance
The Company had in place during the year, and remaining in place at the date of this report, Directors and
Officers Liability Insurance covering the directors of all group companies.
Events after the balance sheet date
The directors draw attention to the events disclosed in note 20.
Auditor and disclosure of information to the auditor
Each director, as at the date of this report, has confirmed that insofar as they are aware there is no relevant
audit information (that is, information needed by the Group’s auditor in connection with preparing their report)
of which the Group’s auditor is unaware, and that they have taken all the steps that they ought to have taken as
directors in order to make themselves aware of any relevant audit information and to establish that the Group’s
auditor is aware of that information.
A resolution to appoint Moore Stephens LLP as the auditor for the ensuing year will be proposed at the Annual
General Meeting.
Approved by the Board of Directors and signed by order of the Board.
C W Egleton
Director
31 March 2017
8
Minoan Group Plc
Independent Auditor’s Report to the members of Minoan Group Plc
We have audited the financial statements of Minoan Group Plc for the year ended 31 October 2016 which
comprise the consolidated statement of comprehensive income, the consolidated and company statements of
changes in equity, the consolidated and company balance sheets, the consolidated and company cash flow
statements and the related notes. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union and
as regards the Parent Company financial statements, as applied in accordance with the provisions of the
Companies Act 2006.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company
and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and the auditor
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient
to give reasonable assurance that the financial statements are free from material misstatement, whether caused
by fraud or error. This includes an assessment of whether the accounting policies are appropriate to the
Group’s and the Parent Company’s circumstances and have been consistently applied and adequately
disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall
presentation of the financial statements.
In addition, we read all the financial and non-financial information in the Report and Financial Statements to
identify material inconsistencies with the audited financial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the
course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies
we consider the implications for our report.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the Group’s and of the Parent
Company’s affairs as at 31 October 2016 and of the Group’s loss for the year then ended.
9
Minoan Group Plc
Independent Auditor’s Report to the members of Minoan Group Plc
(continued)
Opinion on financial statements (continued)
the Group financial statements have been properly prepared in accordance with IFRS as adopted by
the European Union;
the Parent Company financial statements have been properly prepared in accordance with IFRS as
adopted by the European Union and as applied in accordance with the provisions of the Companies
Act 2006;
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Emphasis of matter - going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of
the disclosures made in the Chairman’s Statement, the Strategic Report and in note 1 to the financial
statements concerning the uncertainty regarding the Group’s ability to secure project finance in order to bring
its project in Crete to fruition and to continue as a going concern. This is, in turn, dependent on the Group’s
ability to continue to raise capital in order to meet its finance and working capital requirements to move
forward, whether with the Project or with the travel and leisure business.
The financial statements do not include any adjustments that would result if the Group was unsuccessful in this
regard.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following where under the Companies Act 2006 we are required to
report to you if, in our opinion:
adequate accounting records have not been kept by the Parent Company, or returns adequate for our
audit have not been received from branches not visited by us; or
the Parent Company financial statements are not in agreement with the accounting records and
returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Neil Tustian (Senior Statutory Auditor)
for and on behalf of MOORE STEPHENS LLP
Chartered Accountants and Statutory Auditor
LONDON
31 March 2017
10
Minoan Group Plc
Consolidated Statement of Comprehensive Income
Year ended 31 October 2016
Total transaction value
Revenue
Cost of sales
Gross profit
Notes to
the
Financial
Statements
2016
2015
£’000
£’000
67,820
60,964
7,317
(273)
7,044
6,816
(323)
6,493
Operating expenses
(7,261)
(6,523)
Other operating expenses:
Corporate development costs
Credit/(charge) in respect of share-based payments
17
Operating loss
Finance costs
Loss before taxation
Taxation
Loss after taxation
17
3
5
(595)
24
(788)
(1,484)
(2,272)
-
(2,272)
(511)
(57)
(598)
(1,022)
(1,620)
-
(1,620)
Loss for year attributable to equity holders of the
Company
(2,272)
(1,620)
Loss per share attributable to equity holders of
the Company: Basic and diluted
6
(1.19)p
(0.89)p
The notes on pages 20 to 47 form part of these financial statements.
11
Minoan Group Plc
Consolidated Statement of Changes in Equity
Year ended 31 October 2016
Year ended 31 October 2016
Share
capital
£’000
Share
premium
£’000
Merger
reserve
Warrant
Reserve
£’000
£’000
Retained
earnings
Total
equity
£’000
£’000
Balance at 1 November 2015
14,975
31,435
9,349
1,904
(13,831) 43,832
Loss for the year
-
-
Issue of ordinary shares at a premium
Share based payments
Extension of warrant expiry date (see
note 17)
144
-
1,150
-
-
-
-
-
-
-
-
(2,272)
(2,272)
- -
(24)
-
1,294
(24)
215
-
215
Balance at 31 October 2016
15,119
32,585
9,349 2,119
(16,127) 43,045
Year ended 31 October 2015
Share capital
£’000
Share
premium
£’000
Merger
reserve
Warrant
Reserve
£’000
£’000
Retained
earnings
Total
equity
£’000
£’000
Balance at 1 November 2014
14,843
30,261
9,349
313
(12,268)
42,498
Loss for the year
-
-
Issue of ordinary shares at a premium
132
1,174
Share based payments
-
-
-
-
-
-
(1,620)
(1,620)
- -
1,306
1,591 57
1,648
Balance at 31 October 2015
14,975
31,435
9,349
1,904
(13,831)
43,832
12
Minoan Group Plc
Company Statement of Changes in Equity
Year ended 31 October 2016
Share
premium
£’000
Warrant
Reserve
£’000
Retained
earnings
Total
equity
£’000
£’000
31,435
-
1,904 3,746
52,060
(1,519) (1,519)
144
1,150
-
(24)
1,294
(24)
-
-
-
-
215
- 215
Balance at 31 October 2016
15,119 32,585
2,119
2,203 52,026
Year ended 31 October 2016
Balance at 1 November 2015
Loss for the year
Issue of ordinary shares at a
premium
Share-based payments
Extension of warrant expiry date
(see note 17)
Year ended 31 October 2015
Balance at 1 November 2014
Profit for the year
Issue of ordinary shares at a
premium
Share-based payments
Share
capital
£’000
14,975
-
Share
capital
£’000
14,843
-
132
Share
premium
£’000
Warrant
Reserve
£’000
Retained
earnings
Total
equity
£’000
£’000
30,261
-
313
2,364
- 1,325
-
1,174
-
-
-
1,591 57
47,781
1,325
1,306
1,648
Balance at 31 October 2015
14,975
31,435
1,904
3,746
52,060
13
Minoan Group Plc
Consolidated Balance Sheet as at 31 October 2016
Notes to
the
Financial
Statements
2016
£’000
2015
£’000
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Total non-current assets
Current assets
Inventories
Receivables
Cash and cash equivalents
Total current assets
Total assets
Equity
Share capital
Share premium account
Merger reserve account
Warrant reserve
Retained earnings
Total equity
Liabilities
Current liabilities
Total liabilities
7
8
10
11
14
12
9,771
728
10,499
42,562
2,610
104
45,276
9,835
711
10,546
41,266
2,171
145
43,582
55,775
54,128
15,119
32,585
9,349
2,119
(16,127)
43,045
14,975
31,435
9,349
1,904
(13,831)
43,832
12,730
12,730
10,296
10,296
Total equity and liabilities
55,775
54,128
The financial statements on pages 11 to 47 were approved and authorised for issue by the Board of Directors
on 31 March 2017.
Signed on behalf of the Board of Directors
C W Egleton
Director
14
Minoan Group Plc
Company Balance Sheet as at 31 October 2016
Assets
Non-current assets
Investments
Total non-current assets
Current assets
Receivables
Cash and cash equivalents
Total current assets
Total assets
Equity
Share capital
Share premium account
Warrant reserve
Retained earnings
Total equity
Liabilities
Current liabilities
Total liabilities
Note to the
Financial
Statements
2016
£’000
2015
£’000
9
11
14
12
28,286
28,286
29,836
60
29,896
28,286
28,286
28,756
1
28,757
58,182
57,043
15,119
32,585
2,119
2,203
52,026
6,156
6,156
14,975
31,435
1,904
3,746
52,060
4,983
4,983
Total equity and liabilities
58,182
57,043
Company registration number: 3770602
The financial statements on pages 11 to 47 were approved and authorised for issue by the Board of Directors
on 31 March 2017.
Signed on behalf of the Board of Directors
C W Egleton
Director
15
Minoan Group Plc
Consolidated Cash Flow Statement
Year ended 31 October 2016
Note to the
Consolidated
Cash Flow
Statement
2016
£’000
2015
£’000
Cash flows from operating activities
Net cash inflow/(outflow) from continuing
operations
1
Finance costs
Net cash generated from/(used) in operating
activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets:
Goodwill - deferred consideration
IT project
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from the issue of ordinary shares
Loans received
458
(255)
203
(103)
(130)
(140)
(373)
-
129
(348)
(394)
(742)
(116)
-
(629)
(745)
70
1,435
Net cash generated from financing activities
129
1,505
Net (decrease)/increase in cash
Cash at beginning of year
Cash at end of year
(41)
145
104
18
127
145
16
Minoan Group Plc
Note to the Consolidated Cash Flow Statement
Year ended 31 October 2016
1 Cash flows from operating activities
Loss before taxation
Finance costs
Depreciation
Amortisation
Exchange (gain)/loss relevant to property, plant and equipment
Increase in inventories
Share-based payments
Increase in receivables
Increase/(decrease) in current liabilities
Non cash movement in equity
Net cash inflow/(outflow) from continuing operations
2016
£’000
2015
£’000
(2,272)
1,484
122
334
(36)
(1,296)
(24)
(439)
1,291
1,294
458
(1,620)
1,022
103
208
19
(1,224)
57
(579)
430
1,236
(348)
17
Note to the
Company
Cash Flow
Statement
1
Minoan Group Plc
Company Cash Flow Statement
Year ended 31 October 2016
Cash flows from operating activities
Net cash inflow/(outflow) from continuing
operations
Finance costs
Net cash used in operating activities
Cash flows from investing activities
Acquisition of shares in subsidiary company
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from the issue of ordinary shares
Loans received
Net cash generated from financing activities
Net increase in cash
Cash at beginning of year
Cash at end of year
2016
£’000
2015
£’000
40
(110)
(70)
-
-
-
129
129
59
1
60
(1,166)
(339)
(1,505)
-
-
70
1,435
1,505
-
1
1
18
Minoan Group Plc
Note to the Company Cash Flow Statement
Year ended 31 October 2016
1 Cash flows from operating activities
(Loss)/profit before taxation
Finance costs
Share-based payments charge
Increase in receivables
Increase/(decrease) in current liabilities
Non cash movement in investments
Non cash movement in equity
Net cash inflow/(outflow) from continuing operations
2016
£’000
2015
£’000
(1,519)
1,339
(24)
(1,080)
30
-
1,294
40
1,325
339
685
(1,993)
(1,838)
(920)
1,236
(1,166)
19
Minoan Group Plc
Notes to the Financial Statements
Year ended 31 October 2016
1 Accounting policies
These consolidated financial statements are prepared in accordance with EU adopted International Financial
Reporting Standards (“IFRS”) and the Companies Act 2006 applicable to companies reporting under IFRS.
The principal accounting policies adopted in the preparation of these financial statements are set out below.
These policies have been consistently applied to all the periods presented, unless otherwise stated.
Basis of accounting
The financial statements are prepared under the historical cost convention except for where financial
instruments are stated at fair value.
No statement of comprehensive income is presented by the Company as permitted by Section 408 of the
Companies Act 2006. The Company’s loss before taxation for the year ended 31 October 2016 was £1,519,000
(31 October 2015: Profit £1,325,000). The profit before taxation in the year ended 31 October 2015 includes a
gain on the write off of intercompany balances of £2,543,000.
Adoption of new and revised Standards
The International Accounting Standards Board and IFRIC have issued the following new and revised standards
and interpretations with an effective date after the date of these financial statements, which had not been
endorsed by the EU at 31 October 2016:
Standard/Interpretation
IFRS 9
IFRS 16
Title
Financial instruments
Leases
Effective date
1 January 2018
1 January 2019
The following standards and interpretations, which have not been applied in these financial statements, were in
issue but not yet effective.
Standard/Interpretation
IFRS 15
Title
Effective date
Revenue from contracts with customers 1 January 2018
The directors anticipate that the adoption of these standards in future periods will have no material impact on
the profit of the financial statements of the Group. IFRS 16: Leases will have the impact of increasing both
creditors and fixed assets on the balance sheet by similar amounts that will depend on the operating leases that
the Group is party to during the year ended 31 October 2019. It is not practicable to estimate the number or
nature of leases that the Group may be party to in 2019/20 at this stage.
Going concern
The directors have considered the financial and commercial position of the Group in relation to its project in
Crete (the “Project”) and also in respect of its travel and leisure business. In particular, the directors have
reviewed the matters referred to below.
20
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
1 Accounting policies (continued)
Going concern (continued)
Following the unanimous approval of a Plenum of the Greek Council of State, the highest court in Greece, the
Presidential Decree granting land use approval for the Project was issued on 11 March 2016 and was published
in the Government Gazette. The planning rules for the Project are now enshrined in law. Reports in the Greek
media have stated that the appeals lodged against the Presidential Decree have been rejected by the Greek
Supreme Court.
Accordingly, the directors consider it relevant that having completed financial joint venture agreements (see
note 12) prior to the above, and any other consents, they will conclude further Project joint venture agreements
in the near term. In addition, the directors are considering other options which would have a major beneficial
impact on the Group’s resources.
In addition to specific Project related matters as noted above, and as has been the case in the past, the Group
continues to need to raise capital in order to meet its existing finance and working capital requirements. While
the directors consider that any necessary funds will be raised as required, the ability of the Company to raise
these funds is, by its nature, uncertain.
With a number of acquisitions in the planned expansion of its Travel and Leisure business having been
completed over a period of time, the Group continues to generate profits and cash flow within this sector of its
activities.
Having taken these matters into account, the directors consider that the going concern basis of preparation of
the financial statements is appropriate.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all its
subsidiaries as at 31 October 2016 using uniform accounting policies. The Group’s policy is to consolidate the
result of subsidiaries acquired in the year from the date of acquisition to the Group’s next accounting reference
date. Intra-group balances are eliminated on consolidation.
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration
for each acquisition is measured at the aggregate of the fair values of the assets given, liabilities incurred and
equity instruments issued by the Group in exchange for control of the acquired business. Acquisition related
costs are recognised in the consolidated statement of comprehensive income as incurred.
Critical accounting estimates and judgements
The preparation of the financial statements in accordance with generally accepted financial accounting
principles requires the directors to make critical accounting estimates and judgements that affect the amounts
reported in the financial statements and accompanying notes. The estimates and assumptions that have a
significant risk of causing material adjustments to the carrying value of assets and liabilities within the next
financial year are discussed below:
in capitalising the costs directly attributable to the Project (see inventories below), and continuing to
recognise goodwill relating to the Project, the directors are of the opinion that the Project will be
brought to fruition and that the carrying value of inventories and goodwill is recoverable; and
21
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
1 Accounting policies (continued)
Critical accounting estimates and judgements (continued)
as set out above, the directors have exercised judgement in concluding that the company and group is
a going concern.
Goodwill
Goodwill arising on acquisitions represents the difference between the fair value of the net assets acquired and
the consideration paid and is recognised as an asset (see note 7).
Goodwill arising on acquisition is allocated to cash-generating units. The recoverable amount of the cash-
generating unit to which goodwill has been allocated is tested for impairment annually, or on such other
occasions that events or changes in circumstances indicate that it might be impaired. Any impairment is
recognised immediately as an expense and is not subsequently reversed.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and any recognised
impairment loss.
Depreciation is provided in order to write off the cost of each asset, less its estimated residual value, over its
estimated useful life on a straight line basis as follows:
Freehold land:
Leasehold improvements:
Plant and equipment:
Fixtures and fittings:
Motor vehicles:
capital cost not depreciated
over the term of the lease
3 to 5 years
3 years
3 to 5 years
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount.
22
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
1 Accounting policies (continued)
Intangible assets/Research and development
Research expenditure is recognised as an expense when it is incurred. Development expenditure is recognised
as an expense except where the expenditure meets the following criteria:
a)
the technical feasibility of completing the intangible asset so that it will be available for use or
sale.
b)
its intention to complete the intangible asset and use or sell it.
c)
its ability to use or sell the intangible asset.
d) how the intangible asset will generate probable future economic benefits. Among other things,
the entity can demonstrate the existence of a market for the output of the intangible asset or the
intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset.
e)
f)
the availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset.
its ability to measure reliably the expenditure attributable to the intangible asset during its
development.
The expenditure is amortised over its useful economic life of five years.
Investments
Investments in subsidiaries are stated at cost less any impairment deemed necessary.
Inventories
Inventories represent the actual costs of goods and services directly attributable to the acquisition and
development of the Project and are stated at the lower of cost and net realisable value.
Foreign exchange
Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the date of the
transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are
retranslated at the rates ruling at that date. Any translation differences arising are dealt with in the consolidated
statement of comprehensive income.
The directors consider UK pounds sterling to be the functional currency of the Group, as this is the currency of
the majority of revenue and expenditure.
The financial statements of Loyalward Hellas S.A., the Company’s Greek subsidiary, are retranslated using the
closing rate method and foreign exchange gains and losses on translation are taken directly to equity through
other comprehensive income. The exchange differences are held in a separate reserve and will be recycled to
the statement of comprehensive income should the Group dispose of the subsidiary.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and short-term deposits, with a maturity of less than three
months, held with banks.
23
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
1 Accounting policies (continued)
Trade and other receivables
Trade and other receivables are recognised initially at fair value and shown less any provision for amounts
considered irrecoverable.
Trade and other payables
Trade and other payables are recognised initially at fair value.
Leasing commitments
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the
lease.
Revenue
As the Group acts as an agent between the service provider and the end customer, revenue is presented on a net
basis as the difference between the sales to the customer and the cost of services purchased and not the total
transaction value. When acting as an agent, revenue is recognised when it is notified by the principal as having
been earned and due for payment.
Where the Group provides management or consultancy services, the value of such services is included in
revenue and is recognised in the period in which these services are provided.
Share-based payments
The Group has a Long Term Incentive Plan (“LTIP”) in which any director or employee selected by the
remuneration committee may participate. Awards under the LTIP have been granted on the basis that certain
performance conditions will be met.
The Company has also granted options and warrants to purchase Ordinary Shares of 1p each. The fair values of
the LTIP awards, options and warrants are calculated using the Black-Scholes and Monte Carlo fair value
pricing models as appropriate at the grant date. The fair value of LTIP awards and options are charged to profit
or loss over their vesting periods, with a corresponding entry recognised in equity. This charge does not
involve any cash payment by the Group.
Where warrants are issued in conjunction with a loan instrument, the fair value of the warrants forms part of
the total finance cost associated with that instrument and is released to profit or loss through finance costs over
the term of that instrument using the effective interest method.
Pensions
Loyalward Limited operates a stakeholder pension scheme for its employees and Stewart Travel Limited
operates a defined contribution pension scheme. Contributions payable to the pension scheme are charged to
profit or loss in the period to which they relate.
24
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
1 Accounting policies (continued)
Taxation
Current taxes, where applicable, are based on the results shown in the financial statements and are calculated
according to local tax rules using tax rates enacted, or substantially enacted, by the balance sheet date and
taking into account deferred taxation. Deferred tax is computed using the liability method. Under this method,
deferred tax assets and liabilities are determined based on temporary differences between the financial
reporting and tax bases of assets and liabilities and are measured using enacted rates and laws that will be in
effect when the differences are expected to reverse. Deferred tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction that at the time of the transaction affects neither accounting,
nor taxable profit or loss. Deferred tax assets are recognised to the extent that it is probable that future taxable
profits will arise against which the temporary differences will be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the
timing of the reversal of the temporary difference is controlled by the Group and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities arising in the
same tax jurisdiction are offset.
The Group is entitled to a tax deduction for amounts treated as compensation on exercise of certain employee
share options. As explained under “Share-based payments” above, a compensation expense is recorded in the
Group’s statement of comprehensive income over the period from the grant date to the vesting date of the
relevant options. As there is a temporary difference between the accounting and tax bases a deferred tax asset
is recorded. The deferred tax asset arising is calculated by comparing the estimated amount of tax deduction to
be obtained in the future (based on the Company’s share price at the balance sheet date) with the cumulative
amount of the compensation expense recorded in the statement of comprehensive income. If the amount of
estimated future tax deduction exceeds the cumulative amount of the remuneration expense at the statutory
rate, the excess is recorded directly in equity against retained earnings.
25
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
2 Information regarding directors and employees
Directors’ and key management remuneration
Year ended 31 October 2016
Fees
Sums charged by third parties for
directors’ services
Share-based payments (note 17)
Year ended 31 October 2015
Fees
Sums charged by third parties for
directors’ services
Share-based payments (note 17)
Costs taken to
inventories
Costs taken to
profit or loss
£’000
£’000
236
342
-
578
229
294
-
523
431
70
(24)
477
423
45
57
525
Total
£’000
667
412
(24)
1,055
652
339
57
1,048
The total directors’ and key management remuneration shown above includes the following amounts in respect
of the directors of the Company, adjusted for remuneration waived in exchange for the granting of options as
referred to above:
2016
2015
C W Egleton (Chairman)
D C Wilson
B D Bartman
G D Cook
T R C Hill
Fees/Sums charged
by third parties
Share-based
payments
£’000
296
250
35
35
37
653
£’000
(12)
(9)
(1)
-
(1)
(23)
Directors’ interests in the Company’s LTIP and share options are shown in note 17.
Fees/Sums
charged by third
parties
Share-based
payments
£’000
£’000
264
250
25
25
31
595
29
20
3
-
3
55
26
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
2 Information regarding directors and employees (continued)
Staff costs during the period (including directors and key management)
Year ended 31 October 2016
Salaries and fees
Social security cost
Share-based payments (note 17)
Year ended 31 October 2015
Salaries and fees
Social security cost
Share-based payments (note 17)
Costs taken to
inventories
£’000
Costs taken to
profit or loss
£’000
363
34
-
397
349
37
-
386
4,063
352
(24)
4,391
3,784
324
57
4,165
Total
£’000
4,426
386
(24)
4,788
4,133
361
57
4,551
Note: Staff costs exclude sums charged by third parties for directors’ services.
Monthly average number of persons employed
Directors
Sales and administration
3 Loss before taxation
The loss before taxation is stated after charging:
Depreciation
Amortisation
Operating leases
Auditor’s remuneration:
Audit fees
Tax services
2016
No.
5
203
2015
No.
5
191
2016
£’000
2015
£’000
110
334
83
54
4
103
208
59
73
5
Audit fees in respect of the Company were £17,000 (31 October 2015: £21,250). Tax services fees in respect of
the Company were £500 (31 October 2015: £750).
27
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
4
Segmental information
The Group strategy and growth objectives necessitate the building of an associated infrastructure. The Group
considers it appropriate to identify separately the corporate development division together with costs related to
acquisitions. Accordingly, the Group is organised into three divisions both by business segment and
geographical location:
the luxury resorts division, currently being the development of a luxury resort in Crete, which
includes the central administration costs of the Group;
the Travel and Leisure division (UK), being the operation and management of the travel businesses;
and
the corporate development division (UK) as described above.
The information presented below is consistent with how information is presented to the Board, with the
Group’s accounting policies and with the geographical location of the relevant divisions.
Total transaction value
Revenue
Cost of sales
Gross profit
Operating expenses
Credit in respect of share-based payments
Operating (loss)/profit
Contribution to central costs
Finance costs
(Loss)/profit before taxation
Taxation
(Loss)/profit after taxation
Operating expenses include:
Depreciation and amortisation
Operating leases - plant and equipment
Assets/liabilities
Goodwill
Other non-current assets
Current assets
Total assets
2016
Luxury
Resorts
£’000
-
Travel and
Leisure
£’000
67,820
Corporate
Development
£’000
-
Total
£’000
67,820
-
-
-
7,317
(273)
7,044
-
-
-
7,317
(273)
7,044
(489)
(489)
24
(465)
100
(1,341)
(1,706)
-
(1,706)
(595)
(595)
-
(595)
(6,772)
272
-
272
(100)
(143)
29
- -
29 (595)
-
-
(595)
(7,856)
(812)
24
(788)
-
(1,484)
(2,272)
-
(2,272)
13
-
443
83
-
-
456
83
6,127
157
43,491
49,775
2,641
1,574
1,785
6,000
-
-
-
-
8,768
1,731
45,276
55,775
Total and current liabilities
10,561
2,169
-
12,730
28
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2015
4
Segmental information (continued)
Total transaction value
Revenue
Cost of sales
Gross profit
Operating expenses
Charge in respect of share-based payments
Operating (loss)/profit
Contribution to central costs
Finance costs
(Loss)/profit before taxation
Taxation
(Loss)/profit after taxation
Operating expenses include:
Depreciation and amortisation
Operating leases - plant and equipment
Assets/liabilities
Goodwill
Other non-current assets
Current assets
Total assets
2015
Luxury
Resorts
£’000
-
Travel and
Leisure
£’000
60,964
Corporate
Development
£’000
-
Total
£’000
60,964
-
-
-
6,816
(323)
6,493
-
-
-
6,816
(323)
6,493
(417)
(417)
(57)
(474)
100
(968)
(1,342)
-
(1,342)
(511)
(511)
-
(6,106)
387
-
387
(100)
(54)
233
- -
233
-
-
(511)
(511)
(511)
(7,034)
(541)
(57)
(598)
-
(1,022)
(1,620)
-
(1,620)
-
-
311
59
-
-
311
59
6,127
134
42,082
48,343
2,511
1,774
1,500
5,785
-
-
-
-
8,638
1,908
43,582
54,128
Total and current liabilities
7,181
3,115
-
10,296
29
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
5 Taxation
Consolidated
(a) Analysis of taxation for the year
UK corporation tax
(b) Factors affecting taxation for the year
Loss before taxation
2016
£’000
-
2016
£’000
(2,272)
2015
£’000
-
2015
£’000
(1,620)
Tax on ordinary activities multiplied by the UK corporation tax
rate of 20% (2015: 20.41%)
(454)
(331)
Effects of:
Expenses not deductible for tax purposes
Other timing differences
Increase in tax losses
Taxation (credit)/charge for the year
Taxation losses carried forward appear in note 13.
6 Loss per share
216
15
223
-
159
(7)
179
-
Earnings per share are calculated by dividing the earnings attributable to the equity holders of a company by
the weighted average number of ordinary shares in issue during the year. Diluted earnings per share are
calculated by adjusting basic earnings per share to assume the conversion of all potential dilutive ordinary
shares. As the Group is loss making, there are no dilutive instruments in issue, and therefore the basic loss per
share and diluted loss per share are the same. The weighted average number of shares used in calculating basic
and diluted loss per share for the year ended 31 October 2016 was 190,972,389 (31 October 2015:
182,214,717). See note 20 for potentially dilutive share options issued after the balance sheet date.
30
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
7
Intangible assets
Consolidated
2016
2015
Goodwill
IT Projects
Total
Goodwill
IT Projects
£’000
£’000
£’000
£’000
£’000
Cost
At beginning of year
Additions
At end of year
8,638
130
8,768
1,580
10,218
140
270
1,720
10,488
8,578
60
8,638
1,011
569
1,580
Total
£’000
9,589
629
10,218
Accumulated amortisation
At beginning of year
- 383
-
-
334
717
383
334
717
- 175
- 208
- 383
175
208
383
8,638
8,768
1,197
9,835
1,003
9,771
8,578
8,638
836
1,197
9,414
9,835
The Group conducts an annual impairment test on the carrying value of goodwill based on the recoverable
amount of two cash generating units: the Project and the Travel and Leisure business.
The Project is assessed using fair value less costs to sell. The directors have assessed the recoverable amount of
the Project as being greater than the combined carrying value of the goodwill and inventories of £48,689,000 at
31 October 2016 on the basis of valuations previously carried out and the positive progress made in the period
since (see also note 10).
The goodwill allocated to the Travel and Leisure business is £2,641,000. The recoverable amount of the Travel
and Leisure business has been assessed using a value in use model. The net present value of projected cash
flows is compared with the carrying value of the CGU’s assets and goodwill. Cash flow forecasts are based
upon management approved budgets for a period of one year and a revenue growth rate of 5% for a further
four years, this being consistent with recent historical performance. Thereafter growth rates are reduced to
zero. Cash flows are discounted using a pre-tax discount rate of 11%. The addition to goodwill in the amount
of £130,000 arose from a deferred consideration that is not material but that should have been recognised in the
previous year.
31
Provided in year
At end of year
Net book value
At beginning of year
At end of year
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
8 Property, plant and equipment
Year ended 31 October 2016
Consolidated
Freehold land
Furniture,
fittings, plant
and
equipment
Leasehold
improvements
£’000
£’000
£’000
Cost
At 1 November 2015
Exchange adjustments
Additions
At 31 October 2016
Accumulated depreciation
At 1 November 2015
Provided in year
At 31 October 2016
Net book value
166
26
-
192
44
4
48
1,140
10
62
1,212
776
91
867
265
-
41
306
40
27
67
Total
£’000
1,571
36
103
1,710
860
122
982
At 31 October 2016
144
345
239
728
32
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
8 Property, plant and equipment (continued)
Year ended 31 October 2015
Consolidated
Freehold land
Furniture,
fittings, plant
and
equipment
Leasehold
improvements
£’000
£’000
£’000
Total
£’000
Cost
At 1 November 2014
Exchange adjustments
Additions
At 31 October 2015
Accumulated depreciation
At 1 November 2014
Provided in year
At 31 October 2015
Net book value
180
(14)
-
166
47
(3)
44
1,067
227
1,474
(5)
78
1,140
695
81
776
-
38
265
15
25
40
(19)
116
1,571
757
103
860
At 31 October 2015
122
364
225
711
33
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
9 Investments
Company
Year ended 31 October 2016
Cost
At 1 November 2015
Additions
At 31 October 2016
Impairment
At 31 October 2016
Shares in
subsidiaries
£’000
28,286
-
28,286
-
-
Net book value at 31 October 2016
28,286
Year ended 31 October 2015
Cost
At 1 November 2014
Additions
At 31 October 2015
Impairment
At 31 October 2015
Shares in
subsidiaries
£’000
27,366
920
28,286
-
-
Net book value at 31 October 2015
28,286
Interests in subsidiaries
(Note: The percentages shown in respect of all investments relate to ordinary share capital)
Loyalward Limited (100%) - A company incorporated in England involved in resort design, creation, services
and management.
Loyalward Leisure Plc (100%) - A non-trading company incorporated in England.
Loyalward Hellas S.A. (3.78% owned by Minoan Group Plc and 96.22% owned by Loyalward Limited) - A
company incorporated in Greece engaged in corporate, resort and renewable energy business management in
Greece.
34
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
9 Investments (continued)
Interests in subsidiaries (continued)
Stewart Travel Limited - A company incorporated in Scotland operating as a multi-faceted travel distributor.
During the year ended 31 October 2015, the interests of King World Travel Limited and John Semple Travel
Limited in the share capital of Stewart Travel Limited were acquired by Minoan Group Plc at net book value of
£920,000. King World Travel Limited and John Semple Travel Limited did not trade in the year ended 31
October 2016.
As a consequence the ownership of Stewart Travel Limited is as follows:
Minoan Group Plc
King World Travel Limited
John Semple Travel Limited
10
Inventories
2016
%
100.0
-
-
100.0
2015
%
100.0
-
-
100.0
Consolidated
Inventories at 31 October 2016 amounted to £42,562,000 (31 October 2015: £41,266,000), comprising costs
associated with acquiring and developing the site in Crete, planning and other design costs.
The development site of the Project is to be leased from the Public Welfare Ecclesiastical Foundation Panagia
Akrotiriani (“the Foundation”) for an initial 40 year period following contract activation which will follow the
relevant authorities approving the land planning and land uses for the Project. The Group has an option over a
further 40 years. An amount of £3.9 million is payable to the Foundation on contract activation, plus ongoing
royalties earned on revenue generated by the development (see also note 18).
In particular, the directors have considered the current value of the Group’s overall interest in the Project and
its progress and are of the opinion that the Project site has longer term value in excess of the carrying value of
inventories.
The directors’ opinion of the current value also takes into account the estimate dated 27 June 2011 of the
development value of the Project site in the order of €100 million, which was included in the Company’s AIM
readmission document published on 30 September 2011 and which was reaffirmed in March 2012.
35
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
11 Receivables
Consolidated
Trade receivables
Other receivables and prepayments
Value added tax recoverable
2016
£’000
976
1,562
72
2,610
2015
£’000
805
1,296
70
2,171
Trade receivables are due in 30 days. Of the above £105,000 (31 October 2015: £91,000) was outstanding for
more than 30 days. No provision is considered necessary in respect of irrecoverable amounts.
Company
Amounts owed by subsidiary companies (see note 16)
Other receivables and prepayments
Value added tax recoverable
2016
£’000
29,425
400
11
29,836
2015
£’000
28,341
400
15
28,756
Amounts owed by subsidiary companies are repayable on demand, but are not expected to be received until the
realisation of the project.
12 Liabilities
Current liabilities
Consolidated
Trade and other payables
Other creditor (see below)
Social security and other taxes
Loans (see note 15)
Accruals and deferred charges
2016
£’000
1,756
1,000
828
5,086
4,060
12,730
2015
£’000
1,804
1,000
601
4,241
2,650
10,296
The other creditor arises from amounts received under the terms of financial joint venture agreements between
the Company and certain third parties by which these third parties will receive an initial 5% economic interest
in the Project for a total consideration of £1 million.
36
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
12 Liabilities (continued)
Current liabilities
Company
Trade and other payables
Amounts owed to subsidiary companies (see note 16)
Loans (see note 15)
Accruals and deferred charges
2016
£’000
394
38
5,086
638
6,156
2015
£’000
399
38
4,241
305
4,983
Amounts owed to subsidiary companies are interest free and repayable on demand.
£5,000,000 has been drawn down under the terms of the loan facility agreement with Hillside International
Holdings Limited (“Hillside”) (31 October 2015: £5,000,000). During the year, the repayment date was
extended to 30 June 2017. The loan is subject to interest at 8% per annum. Hillside has also received Warrants
to subscribe for ordinary shares in Minoan Group Plc as the facility has been drawn down as stated in note 17.
The total finance cost of the loan is comprised of the cash interest at 8% per annum and the fair value of the
Warrants issued in association with loan and has been recognised as a finance cost spread over the life of the
loan using the effective interest method.
Under the terms of the loan facility agreement Hillside has a fixed and floating charge on the Company’s assets
and a floating charge on the assets of Stewart Travel Limited, John Semple Travel Limited and King World
Travel Limited.
37
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
13 Deferred taxation
Consolidated
No deferred taxation asset has been recognised in the financial statements. The total potential asset is as
follows:
Tax effect of timing differences
because of:
Accelerated capital allowances
Other short term timing differences
Losses
Total potential asset
Amount recognised
2016
£’000
2015
£’000
2016
£’000
2015
£’000
(75)
330
2,055
2,310
(66)
474
2,144
2,552
-
-
-
-
-
-
-
-
The above potential deferred tax asset is based on a corporation tax rate of 17% (2015: 19%).
Company
No deferred taxation asset has been recognised in the financial statements. The total potential asset is as
follows:
Tax effect of timing differences
because of:
Other short term timing differences
Losses
Total potential asset
Amount recognised
2016
£’000
200
1,615
1,815
2015
£’000
2016
£’000
2015
£’000
262
410
672
-
-
-
-
-
-
The above potential deferred tax asset is based on a corporation tax rate of 17% (2015: 19%).
Following due consideration of the availability of tax losses in relation to future anticipated taxable profits, and
in accordance with IAS 12, the deferred tax asset has not been recognised. The deferred tax asset not
recognised will be recoverable should there be appropriate future taxable profits.
38
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
14 Share capital
Called up, allotted and fully paid
31 October 2016 - 194,650,968 Ordinary Shares of 1p each
54,148,031 Deferred Shares of 24p each
31 October 2015 - 187,671,524 Ordinary Shares of 1p each
54,148,031 Deferred Shares of 24p each
Debt to be settled by the issue of shares (see note 15)
17,703,198 Ordinary Shares of 1p each (2015: 10,271,239
Ordinary Shares of 1p each)
2016
£’000
1,946
12,996
-
-
14,942
177
15,119
2015
£’000
-
-
1,876
12,996
14,872
103
14,975
Holders of Ordinary Shares have the right to vote and the right to receive dividends. Holders of Deferred
Shares have no right to vote and no right to receive dividends.
During the year, 3,000,000 Ordinary Shares of 1p each were issued at 8 pence per share, 1,444,444 Ordinary
Shares of 1p each were issued at 9 pence per share and 1,375,000 Ordinary Shares of 1p each were issued at 10
pence per share under the terms of loan agreements. In addition, 1,160,000 Ordinary Shares of 1p each were
issued at 9 pence per share to settle certain existing liabilities.
15 Financial instruments and risk management
The Group’s financial instruments comprise borrowings, cash and various items such as trade receivables and
trade payables that arise directly from its operations.
It is, and has been throughout the year under review, the Group’s policy that no trading in financial instruments
shall be undertaken.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk and foreign
currency risk. The Board reviews and agrees policies for managing each of these risks and they are
summarised below.
39
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
15 Financial instruments and risk management (continued)
Liquidity risk
The Group maintains sufficient funds in local currency for operational liquidity. The Board considers liquidity
risk at Board meetings through the monitoring of cash levels and detailed cash forecasts. Funding to date has
been obtained principally through the issue of equity shares as required, either for cash or in settlement of
liabilities. The Group has also issued loan agreements which may be settled by the issue of shares. See note 1
for further information relating to current liquidity and funding risk.
All financial liabilities are non-derivative and fall due within one year (see note 12).
In order to complete the development of the Project, the Group will require substantial additional financing. It
is the directors’ current intention to develop the Project in such a way as to minimise or eliminate the need for
further equity financing. It is intended that this will be achieved through utilising joint venture arrangements
and debt project finance.
Foreign currency risk
The Group has one overseas trading subsidiary, Loyalward Hellas S.A., which operates in Greece and whose
revenues and expenses are denominated almost exclusively in Euros. The Group finances Loyalward Hellas
S.A. via Euro transfers from Loyalward Limited as required. The amount transferred ensures that the Euro
balance held by Loyalward Hellas S.A. at each period end is not material. All UK companies hold cash in UK
pounds Sterling only. The Sterling and Euro cash balances attract interest at floating rates.
Of the Groups assets, less than 1% is held in Euros, the remainder being held in Sterling. Of the Group’s
liabilities, 11% is held in Euros, with the remainder held in Sterling.
Short-term receivables and payables
Short-term receivables and payables have been excluded from the following disclosures.
Interest rate risk
The Group finances its operations through a mixture of equity and borrowings. The Group has historically
borrowed in Sterling only.
The Group’s liabilities, which are all denominated in sterling, are as follows:
2016
2015
£’000
£’000
Loans to be settled by the
issue of shares
Loans repayable in less than
one year
2,400
5,086
1,630
4,241
The loans to be settled by the issue of shares, of which £325,000 are to be settled by the issue of shares at 9
pence per share, £75,000 are to be settled by the issue of shares at 10 pence per share, £200,000 are to be
settled by the issue of shares at 11.6 pence per share, £150,000 are to be settled by the issue of shares at 12
pence per share, £300,000 are to be settled by the issue of shares at 13.75 pence per share, £150,000 are to be
settled by the issue of shares at 14 pence per share, £500,000 are to be settled by the issue of shares at 15.5
pence per share and £700,000 are to be settled by the issue of shares at 18 pence per share, have been classified
as equity in accordance with IAS 32 (note 14).
During the year a total of £180,000 of loans was settled by the issue of shares at prices between 9 pence per
share and 10 pence per share (31 October 2015: £585,000 at 8.5 pence per share) (note 14).
40
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
15 Financial instruments and risk management (continued)
The Group has no derivatives or financial instruments other than those disclosed above. There is no material
difference between the book value and the fair value of the Group’s financial assets and liabilities at 31
October 2016 and at 31 October 2015.
16 Related party transactions
The following are related parties and provided services to the Group:
Simmons International Limited, a company in which C W Egleton is a minority shareholder.
Bizwatch Limited, a company in which J C Watts, a director of Loyalward Limited, owns 50% of the issued
share capital and M A Fitch, a director of Loyalward Hellas S.A. owns 50% of the issued share capital.
I.H.M. Industry & Hotel Management Limited, a company in which C Valassakis, a director of Loyalward
Limited, is a controlling shareholder.
B D Bartman & Co, a firm in which B D Bartman is a partner.
Keith Day & Partners Ltd, a company in which N J Day, a director of Loyalward Limited, is a director and
shareholder.
Transactions undertaken with these related parties in relation to directors’ services are shown below.
Services of the above persons
supplied in year ended
Payable as at
31.10.16
£’000
31.10.15
£’000
31.10.16
£’000
31.10.15
£’000
296
16
30
35
35
264
17
14
25
20
296
87
127
125
55
186
81
101
87
20
Simmons International Limited
Bizwatch Limited
I.H.M. Industry & Hotel
Management Limited
B D Bartman & Co
Keith Day & Partners Ltd
During the year Morgan Rossiter Limited, a company of which G D Cook is a director, supplied public
relations services to the Company in the amount of £36,000 (31 October 2015: £36,000). The amount payable
to Morgan Rossiter Limited as at 31 October 2016 is £7,200 (31 October 2015: £14,400).
There have been no purchases or sales with companies within the Group. The Company’s balances outstanding
with other Group companies arising from financing transactions are shown below.
Receivable/(Payable) as at 31.10.16
£’000
Receivable/(Payable) as at 31.10.15
£’000
Loyalward Limited
Stewart Travel Limited
Loyalward Leisure Plc
28,178
1,247
(38)
27,304
1,037
(38)
41
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
17 Long term incentive plan, share options and warrants
Share-based payments charge
Year ended 31 October 2016
Share-based payments - directors
Year ended 31 October 2015
Share-based payments - directors
£’000
(24)
(24)
57
57
Note:
Under the terms of the Long Term Incentive Plan (“LTIP”) any director or employee selected by the
remuneration committee may participate. Awards under the LTIP have been granted on the basis that certain
performance conditions will be met.
The performance conditions are as follows:
Performance condition A
Fulfilled during year ended 31 October 2012
Performance condition B
Performance condition C
The Group achieves a certain level of consolidated
profit at EBITDA level (ignoring any charge in
respect of share-based payments) for a six month
accounting period.
The price of an ordinary share of Minoan Group Plc
remains at an average price of 50 pence or above for
ten consecutive trading days on AIM or a recognised
stock exchange
42
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
17 Long term incentive plan, share options and warrants (continued)
Share-based payments charge (continued)
The following awards have been granted with an expiry date of 26 April 2017:
Performance condition A
Performance condition B
Performance condition C
Maximum number of
Ordinary Shares
exercisable at 9 pence
Maximum number of
Ordinary Shares
exercisable at 9pence
Maximum number of
Ordinary Shares
exercisable at 9pence
1,400,000
1,000,000
130,000
150,000
120,000
2,800,000
1,400,000
1,000,000
130,000
150,000
120,000
2,800,000
1,400,000
1,000,000
130,000
150,000
120,000
2,800,000
C W Egleton
D C Wilson
B D Bartman
T R C Hill
W C Cole (director
Loyalward Limited)
The charge made for the value of the LTIP and options has been calculated using the Black-Scholes and Monte
Carlo pricing models as appropriate. As stated previously, the charge does not involve any cash payment.
43
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
17 Long term incentive plan, share options and warrants (continued)
Share-based payments charge (continued)
Directors’ interests in share options
31 October 2016
31 October 2015
Exercise
price
Ordinary
Shares
Expiry
date
Exercise
price
Ordinary
Shares
Expiry
date
Options
B D Bartman
B D Bartman (see note
2 below)
B D Bartman (see note
2 below)
W C Cole (director
Loyalward Limited)
W C Cole (director
Loyalward Limited)
W C Cole (director
Loyalward Limited)
(see note 2 below)
W C Cole (director
Loyalward Limited)
(see note 2 below)
G D Cook
G D Cook (see note 2
below)
G D Cook (see note 2
below)
Simmons International
Limited
Simmons International
Limited
Carried forward
7p
1p
1p
7p
7p
1p
1p
7p
1p
1p
7p
7p
200,000
31/12/17
1,000,000
31/12/17
850,000
31/12/17
500,000
31/12/17
100,000
31/12/17
7p
1p
1p
7p
7p
200,000 31/12/16
1,000,000
31/12/16
850,000
31/12/16
500,000
31/12/16
100,000
31/12/16
1,000,000
31/12/17
1p
1,000,000
31/12/16
1,711,111
31/12/17
250,000
31/12/17
384,615
31/12/17
377,778
31/12/17
500,000
31/12/17
400,000
31/12/17
1p
7p
1p
1p
7p
7p
1,711,111
31/12/16
250,000
31/12/16
384,615
31/12/16
377,778
31/12/16
500,000
31/12/16
400,000
31/12/16
7,273,504
7,273,504
44
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
17 Long term incentive plan, share options and warrants (continued)
Directors’ interests in share options (continued)
31 October 2016
31 October 2015
Exercise
price
Ordinary
Shares
Expiry
date
Exercise
price
Ordinary
Shares
Expiry
date
Options
Brought forward
T R C Hill
T R C Hill (see note 2
below)
D C Wilson (see note 2
below)
D C Wilson (see note 2
below)
D C Wilson (see note 2
below)
B Cassidy (director of
John Semple Travel
Limited) (see note 2
below)
Other share options
7p
1p
1p
1p
1p
1p
7,273,504
300,000
31/12/17
1,233,333
31/12/17
1,000,000
31/12/17
2,500,000
31/12/17
850,000
31/12/17
7p
1p
1p
1p
1p
7,273,504
300,000
31/12/16
1,233,333
31/12/16
1,000,000
31/12/16
2,500,000
31/12/16
850,000
31/12/16
122,222
31/12/17
1p
122,222
31/12/16
13,279,059
13,279,059
The following additional options to purchase ordinary shares in the Company have been granted:
Exercisable at 60 pence per share
Exercisable at 1 pence per share (see note 2 below)
Exercisable at 7 pence per share
Exercisable at 8 pence per share
Exercisable at 10 pence per share
Notes re share options:
Ordinary Shares
31.10.16
3,318,000
223,077
325,000
2,500,000
250,000
6,616,077
31.10.15
3,318,000
223,077
325,000
2,500,000
250,000
6,616,077
Expiry date
See note 1
31/12/17
31/12/17
31/12/17
31/12/17
1. The expiry date of these options is 90 days after certain valid building licences and permits have been
granted.
2. Granted in exchange for the waiver of fees etc. by current directors and a former director (see also note 20)
45
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
17 Long term incentive plan, share options and warrants (continued)
Warrants
The following warrants to subscribe for ordinary shares in the Company have been issued in accordance with
the terms of the loan facility agreement with Hillside International Holdings Limited:
During the year the expiry date of the warrants was extended by one year. This modification resulted in an
increase of £215,000 in the fair value of the warrants. This has been spread, along with the existing fair value,
across the life of the loan on an amortised cost basis. The modification was valued using Black-Scholes
method.
Exercisable at 8 pence per share
Exercisable at 8 pence per share
Exercisable at 8 pence per share
Exercisable at 13 pence per share
Exercisable at 8 pence per share
Exercisable at 8 pence per share
Exercisable at 8 pence per share
Ordinary Shares
31.10.16
10,000,000
5,000,000
10,000,000
10,000,000
5,000,000
5,000,000
5,000,000
50,000,000
31.10.15
10,000,000
5,000,000
10,000,000
10,000,000
5,000,000
5,000,000
5,000,000
50,000,000
Expiry date
17/10/18
27/11/18
05/02/19
07/08/19
30/04/20
28/05/20
23/10/20
As part of the loan facility agreement, £125,000 will be payable to the warrant holder for each 10 million
warrants exercised.
Finance costs
Year ended 31 October 2016
Fair value of warrants issued
Loan interest
Other interest
Year ended 31 October 2015
Fair value of warrants issued
Loan interest
Other interest
£’000
930
411
143
1,484
628
340
54
1,022
18 Contingent liabilities and commitments
Other than as stated in notes 10 and 19, the Group has no other capital or operating commitments.
46
Minoan Group Plc
Notes to the Financial Statements (continued)
Year ended 31 October 2016
19 Operating lease commitments
The Group has the following total future minimum lease commitments in respect of non-cancellable operating
leases:
Year ended 31 October 2016
Leasehold property
Equipment
Motor vehicles
Up to 1 year
£’000
354
46
16
416
Leases expiring in
2 to 5 years
£’000
1,239
77
25
1,341
Over 5 years
£’000
738
-
-
738
Year ended 31 October 2015
Leasehold property
Equipment
Motor vehicles
Up to 1 year
£’000
307
44
12
363
Leases expiring in
2 to 5 years
£’000
969
111
15
1,095
Over 5 years
£’000
427
-
-
427
20 Events after the balance sheet date
Total
£’000
2,331
123
41
2,495
Total
£’000
1,703
155
27
1,885
1. On 22 December 2016 the Company announced the issue of 2,700,000 Ordinary Shares of 1p each at 8p
per share to settle certain existing liabilities.
2. Also on 22 December 2016 the Company announced that the expiry dates of certain Options granted to
certain directors and executives be extended from 31 December 2016 to 31 December 2017 (see note 17).
3. On 10 January 2017 the Company announced that, in order to satisfy certain existing commitments, it has
granted Options to subscribe for 6,000,000 Ordinary Shares of 1p each at 10p per share. The Options to
expire on 9 July 2018.
4. On 11 January 2017 the Company announced that, as part of his employment arrangements, it has
granted an Option to subscribe for 1,000,000 Ordinary Shares of 1p each at 8p per share to Brian
Cassidy, a Person Discharging Managerial Responsibilities. The Option to expire on 9 January 2020.
5. On 24 March 2017 the Company announced that it has noted reports in the Greek Media stating that the
appeals against the Presidential Decree granting land use approval for its Project in Crete have been
rejected by the Greek Supreme Court.
47